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APS isn't 1st utility to delve into elections

PHOENIX -- Candidates running for the Arizona Corporation Commission have been debating whether it is appropriate for Arizona Public Service Co., a company regulated by the commission, to get involved in the elections.

Candidates running for the Arizona Corporation Commission have been debating whether it is appropriate for Arizona Public Service Co., a company regulated by the commission, to get involved in the elections.

They argue that although legal, it is inappropriate for a utility to spend money and help select those who will set the company's prices for power.

The debate so far has overlooked the fact that small water utilities helped elect three of the sitting regulators.

In 2012, a water-company lobbyist named Paul Walker contributed money to the benefit of three Republicans who were elected to the Arizona Corporation Commission.

Walker chaired a group called "Arizonans for Responsible Water Policy" that spent $9,000 during the 2012 election cycle on telemarketing campaigns to benefit Bob Stump, Susan Bitter Smith and Bob Burns, according to filings with the Arizona secretary of state.

Since then, his group has successfully fought for rate hikes that will have utility customers paying the income taxes of some water companies' owners, and also paying nearly automatic rate increases without the companies having to endure a lengthy rate hearing.

Walker represents Arizona Water Co., Liberty Water and Global Water. It has previously counted Pivotal Utilities as a member, he said.

Walker said utilities contributing to the political campaigns of those that will set rates for them should not be controversial so long as the motives are pure.

"I think the question is why — why are (utilities) supporting certain candidates in the race," he said.

"I think we need to make a decision what is best for Arizona. We are not out electing people who will provide us abnormal returns, " Walker said.

He said his clients wanted to help defeat Democrats Paul Newman and Sandra Kennedy because as commissioners, they made "reckless" decisions that were bad for the companies and bad for the state.

One of those decisions was opposing a water utility that wanted to spend $300,000 to recharge an aquifer, which is required by state law, Walker said.

"Those decisions are bad for Arizona," he said.

The rate hikes Walker's group has helped pass are controversial.

Last year, the commissioners voted 4-1 to allow the owners of small water companies organized as S corporations to charge their customers for the income-tax expense they incur through the company.

Commissioner Brenda Burns opposed the measure.

About 40 AARP members held a protest at the commission in March during a hearing for Pima Utility Co., which was the first to take advantage of the change.

Pima is primarily owned by developer Ed Robson's family trust, which will shift its tax liability to utility customers.

Pima is not one of Walker's clients, he said, and none of his clients benefits from the income-tax change. But Walker's group pushed for the increase because he said it helps several other small water companies improve their operations.

"While some argue that anything that raises rates is bad for customers, that view does not reflect the reality of the economic and environmental intersection that exists in reality," he said in a letter to then-Commissioner Kennedy in 2012, shortly before his group spent the money to help defeat her and the other Democrats in the election.

Walker's group also pushed for a form of nearly automatic rate hikes that small water companies can enact without going through a lengthy rate hearing at the commission.

That policy is controversial enough that the state consumer advocate, the Residential Utility Consumer Office, has taken the case to the Arizona Court of Appeals regarding how it was implemented.

Walker said his group supports the increases because they allow water companies to gradually increase rates annually, rather than file large rate increases every few years, and he said consumers prefer such gradualism.

"People don't want to see their budget change dramatically every four or five years," he said.

He said RUCO officials understand the perspective and differ with Walker's group only regarding whether the regulators have the authority to allow such gradual increases.

Walker said the water companies he represents have not decided whether they will support any of the candidates for the commission this year.